You know one thing that I've always wondered on this board? Just how long can a topic title be? That one in the music

[Sloats]

Originally posted by The Man

Originally posted by Sloats
401(k) have destroyed retirement security in this nation.

I guess I'll wait until I actually understand the industry to say you are an idiot, but it sure seems that way.

Being allowed to put in money pre-taxed and matched by my employer sure seems like a better idea than putting all my hope in the governmental Social Security ponzi scheme

Social Security was only meant as a supplement, not a full replacement of postretirement wages. Approx 15% Replacement. Plus they were not pre- funded by those who are receiving. Now the check is due.

Pension plans were meant to provide the majority of retirement income. However, an obscure law slipped into a bill set up 401(k). It was not intended to become a retirement savings plan, but it did.

The major differences between DB and DC:
DB the employer takes on the investment risk, is additional compensation. DC the EE must elect their investment stategy and is paid from their wages (with match in some cases).

The problem is that a majority of ERs (employers) did not sense much value of the pension plan. What does Final Average 5 times 2% time 25 Years of Service mean to some mathmatical illiterate at age 45? But rather than try to educate their EEs, an ER can just set up a DC plan and say: Your Benefit is $12,000.

So DB plans were terminated and converted into DC plans in the 80's, eliminating provisions and procedures necessary for a DB plan (PBGC, Actuaries, etc...). THIS IS WHERE CASH BALANCE PLANS EVOLVED. Not from a desire of the employer to screw employees, but out of a desire to retain invesment risk. But I digress.

How does this mean a death of Retirement Benefits? Well, like every other Gen Xer, I'm dropping 15% of my wages into my DC plan with a piddly 1.5% match. To reach my desired 60% replacement, I have to pay for 55% (of the 60%) of it myself. In addition, I am assuming the investment risk, which was negative the past two years. I lost money. I have to contribute more. Plus what is going to happen when I turn 45/50? 1) I have lost any Early Retirement Subsidies traditionally offered in DB plans, 2) (More importantly) The Baby Boomers will start withdrawing their money from the stock market. So, here I am 10 years away from retirement, and I am expecting to lose 10%-20% because the fucking yuppies will crash the system by liquidating their portfolios.

Security is lost because an individual is 100% reliant on the stock market for their retirement and not a balance (a diversification) in the company that they worked for and the stock market.